Apple's music streaming negotiations come down to the wire | Cult of Mac

Apple’s music streaming negotiations come down to the wire

By

Apple has big ambitions for its new music streaming service.
Will Beats redesign be ready for WWDC? Photo: Jim Merithew/Cult of Mac
Photo: Jim Merithew/Cult of Mac

Apple is planning to use WWDC to spotlight the new streaming music service its been working on for year. It could be Apple’s biggest play in the music industry since the launch of iTunes, but according to a new report, Apple is still struggling to ink its deal with record labels.

A report from Bloomberg claims Apple is still negotiating with record labels over the terms of the new service, with labels pushing to get a bigger chunk of revenue generated than they currently receive from their deal with Spotify. Record labels currently take 55% of Spotify’s monthly $9.99 rate, with publishers taking 15%.

The new Music app in iOS 9 will be the home of the subscription service along with a revamped version of iTunes radio and downloads. Exclusive behind-the-scenes videos from artists will offered on the service, plus featured artists pages that can be used to host videos, songs, and other things for free as part of Apple Connect. Apple plans to compensate artists for the songs it gives away for free, but the revenue split is still a sticking point.

Labels are trying to get Apple to give them 60% of all revenue generated from subscriptions. That sounds almost fair to me, as long as artists are getting 30% – 40% of that piece. At this point in the negotiations I think it’s just time for Apple execs to cave. The company is used to getting everything it wants in deals like this, but the time has come for Apple to relinquish it’s hold and maybe even do a 30/70 split like it does with developers.

If Apple takes a bigger piece of the profits it will do very little to raise the company’s bottomline, even if it does get as many subscribers as Spotify. So why worry about making money off the music service. Run it at a small deficit to make the record labels, their artists, and your users happy. They can afford to subsidize the music industry the upended. It’s not like Apple isn’t making an ungodly amount of money off hardware.

Source: Bloomberg